Capitation, Consolidation and Capitulation

LOS ANGELES, Dec. 6, 2016 /PRNewswire/ -- These three C's continue to permeate the digital ad space.  As a native Californian, when I think of CCC I think of California Chicken Café (my go to healthy lunch).  Today it's taken on a different meaning entirely.

What's become known as the ad tech tax has continued to grow.  This capitation of digital ad revenue has a tremendous impact on the space.  While some platforms have nullified agreements with ad networks in the space i.e. Liverail.   Others have increased fees in the form of rev share models, CPM based server fees and CPM based fraud prevention fees.

Companies like Barons Media have seen this as an opportunity to develop their own technology instead of subscribing to new and inflated fees.  They've recentlylaunched their own SSP platform and are now developing a DSP.  You can hear more about it on their GM, Daniel Kornblit's Podcast: https://medium.com/the-ad-ops-podcast/cutting-your-ad-tech-tax-building-dsp-ssps-in-house-talk-with-daniel-kornblit-65221f78e68a#.ubns2zfd7

Per the podcast they have also signed contracts with fraud prevention companies such as Moat and Forensiq as it has greatly reduced the cost of keeping their SSP secure.  Alternatively, they would have had to pay the inflated fraud prevention fees charged by platforms.  For them, their own technology has been a tremendous source of savings.

Unfortunately, the path Barons Media has taken is not an option for every company.  You need a competent tech staff and deep enough pockets to weather this type of transition.  The all too familiar picture in the space is usually consistent with consolidation instead.

We're seeing a major consolidation in the space as smaller companies are being forced out by these fees and others are acquired by larger VC backed entities.  With this consolidation, those who continue to survive are being rewarded.  Ad spend has continued to increase and companies like Barons Media are benefiting from fewer networks in the industry.

As we've learned, capitulation is not an option for everyone.  Barons Media and others are continuing the good fight and coming out ahead in the process.         

Media Contact: [email protected]

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SOURCE Barons Media

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